O.C.’s Manufacturing Index Worst in Decade

Jolted by the Sept. 11 terrorist attacks, Orange County’s manufacturers are experiencing their worst slump since the deep recession a decade ago, Chapman University economists reported Tuesday.

A survey of factory purchasing managers showed significant declines in production, jobs and purchased materials between the second and third quarters. Inventories shrank, but deliveries were faster because of lower demand. The hardest-hit categories included new orders, a sign that there will be no quick reversal to the decline.

The Chapman study shows manufacturing in the county “is definitely in recession,” said Howard Roth, a state Department of Finance economist. He attributed the decline partly to weak foreign economies, noting that second-quarter exports from California had declined more than 6%.

The report showed that new orders fell not only in industries such as technology and industrial products but also in lumber, wood products, furniture and fixtures, possibly reflecting a slowing in the real estate industry, which has held up better than most.

Chapman’s survey, taken in late September and early October, put an overall index of manufacturing for the July-September period at 38, down from 45.8 in the second quarter and 58.2 in the third quarter of 2000. A reading below 50 means factory activity is declining. The few bright spots in the report included defense contracting and medical and dental supplies.